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PlayStation division posts loss of $841 million in Q2

Sony has announced its Q2 earnings, which ended on September 30th. The PlayStation business has doubled its losses from the previous quarter. Operating losses were reported at 96.7 billion yen ($841 million). Sales, however, climbed almost 43 percent to 243.4 billion yen ($2.12 billion).

Why such significant losses in spite of terrific sales? Pricing of the PS3 hardware: "strategic pricing of PS3 at points lower than its production cost and the increase in PS3-related inventory write-downs recorded during the current quarter compared to the same quarter of the previous year." Sony sells each PS3 system at a loss, and they sold 1.31 million PS3 systems during this quarter. That has undeniably bled Sony's bank. 10.3 million units of PS3 software were also sold this quarter.

Analysts are not very optimistic about the future of PlayStation. "There are still no bright signs for the game business," Seiichiro Iwamoto, a fund manager at Mizuho Asset Management in Tokyo told Bloomberg. "PS3's price is still too high to help Sony regain market share."

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(Page 2)

21. I think the price point of the PS3 is more than reasonable. Remember those systems of yore, like TG16 @ $900? [sarcasm]At least those things really had some lasting power.[/sarcasm]

Posted at 1:40PM on Oct 25th 2007 by Larz

22. Everyone keeps comparing the prices of PS3 and 360, but the 360 is so much more expensive! Why don't people see that?

Base machine, hi-def movie player, hard drive, online service, wifi, headset, camera.
Total cost = $460

Base machine, hi-def movie player, hard drive, online service, wifi, headset, camera.
Total cost = $935

Not getting the red ring of death = priceless.
(haha, couldn't resist)

Posted at 1:52PM on Oct 25th 2007 by Larz

23. Why O why not bring the 40GB out for $299.99? If you are going to lose money, at least make some GD sales in the process! $300 will be cometively priced, make people froget about BC, and have some buy the 80GB anyway.


Posted at 1:59PM on Oct 25th 2007 by ptaylor7805

24. Xbox divison has lost 6 billions since its creation, it doesnt matter if their division is making a small profit now, it will take them a lot of time to cover all those looses. I'm not bashing Xbox, its just the way the industry works. PS3 is doing fine,it has the same growing as Xbox 360 but 1 year behind. And about thd Wii, Wii is selling like cakes but just consoles not videogames (myself included) people will finally realize they have a not so good excercise machine.

Posted at 2:03PM on Oct 25th 2007 by jigzat

25. As sony fans can we discuss how f***ed the ps3 is? i don't know where to begin. first, as of October 2007 is the most expensive console with the fewest games -- let alone no great games you would want to buy a new console for. It also has no f***ing backwards compatability unless you run out and buy the 60gb before they vanish. 80gb software-based BC is a joke -- sony is asking the 3rd party developers to create the software patch but nobody is gonna do that b/c the ps3 install base is so small and ps3 is tough to develop games for. i was going to wait to buy a ps3 until DMC4 next spring. however, if i can't buy a BC ps3 to play ps2 games on next spring, b/c 60 gb version will be gone, why not just buy a 360? and this from a guy who has a ps2 and a psp

Posted at 2:08PM on Oct 25th 2007 by aliss77777

26. PS3 60 Gig & 20 Gig - 99% Backwards Compatible
PS3 80 Gig - 80-90% Backwards Compatible.
PS3 40 Gig - 0% Backwards Compatible.
Your Choice!

Xbox360 10% Backwards Compatible. SHUT UP XBots.

I own a 60 Gig PS3 because Backwards Compatibility is important to me. I also Own a 20Gig XBox360, and as someone who transitioned from a XBox1 and a PS2, I can tell you that the 360 is a JOKE in terms of Backwards Compatibility.

Additionally, My 360 is awaiting it's Red Ring of Death Coffin as we speak. It died October 18th Playing Halo3. 7 Days for the Return Coffin and 4-6 weeks for the Repair TurnAround!!!
This is the Reason I buy all Multi-Platform games for my PS3. Backwards Compatibility and Reliability. If you buy a 360 TODAY, it still has a 25-33% chance of getting the Red Ring of Death. Which is why the XBots are here trying to discredit every other system.

Posted at 2:10PM on Oct 25th 2007 by Scott Krueger

27. Xbox divison has lost 6 billions since its creation, it doesnt matter if their division is making a small profit now, it will take them a lot of time to cover all those looses. I'm not bashing Xbox, its just the way the industry works. PS3 is doing fine,it has the same growing as Xbox 360 but 1 year behind. And about thd Wii, Wii is selling like cakes but just consoles not videogames (myself included) people will finally realize they have a not so good excercise machine.

Posted at 2:15PM on Oct 25th 2007 by Jsc

28. I have all 3 consoles as well. Just to clarify, the new 360s are pretty quiet. After mine red ringed I got a new one (warranty) and was very surprised by the void left by the absent fan sound. I think it's a great system with awesome games and great online service. It's the one I use most at the moment(Halo, Bioshock, en early Orange Box, can't wait for Mass Effect).

Sony fanboys complaining about how Live is not free makes no sense when they bought and support a machine that is/was worth around $600. That's enough for 12 years of Live. If you can afford a PS3 you can afford Live.

HOWEVER. The PS3 may be having a bad year but it's nowhere near deserving comments of how Sony is doomed, or that PS3s around the world are about to commit suicide out of shame. Resistance, Motorstorm, Folklore, Gran Turismo, Uncharted, Haze, UT3 (hopefully still early), Warhawk, MGS4, the FF series, LBP, and so on.

The Blue Ray may make it expensive, but at the same time will allow for some great games that wouldn't be possible otherwise, and lets you watch movies to boot.

Honestly this console war has gotten really old really fast. Either most of the people on the Internet are whiny teens or a remarkable number of people out there own stock in either Sony or MS. Why do game consoles elicit such irrational pride? I thought this was all about the games and having great experiences. Who cares what the box that plays them looks like.

Listening to people say things like Halo or Bioshock aren't that great, or that Warhawk sucks and that the PS3 has nothing good on the horizon baffles me. There's too much fanatism-induced blindness this generation.

Posted at 2:16PM on Oct 25th 2007 by hiiro

29. Its so hilarious to read the denial in you sony fanboy's post...

MS has ALREADY covered the losses in the xbox division! From the their millions made on Windows, and reserves...

Meanwhile sony is operating in the red in most divisions according to several analysts.

Posted at 2:16PM on Oct 25th 2007 by TheForceUnleased08

30. Good stuff hiiro. That was pretty unbiased.

I have to disagree on Halo. It really is not that great, and definitely not worth the hype. But if I had stopped playing PC FPS's about 10 years ago, I might think it was awesome, so I can kinda see where some people are coming from.
Bioshock IS awesome though... but not exclusive to 360, and sooo much better on PC. Same with Orange Box. Also I heard there were lots of problems with playing TF2 on 360.

Posted at 2:32PM on Oct 25th 2007 by Larz

31. @28
Good point. However the new Xbox can still get the RROD randomly,I wanna hear how the new fans sound though.

You're acting like a troll.

Posted at 2:35PM on Oct 25th 2007 by FM

32. Hey, TheForceUnleased08.

What part of "gaming division" do you not understand? M$ has always made money on their Windows/office division. It's their gaming division that has NEVER been profitable.

When the finanical reports come out. They never include Windows/Office sales into the gaming division. If that was the case. Then you could say the same thing about Sony's HDTV (LCD) subsidizing their gaming division.

Posted at 4:15PM on Oct 25th 2007 by GL

33. wow all you guys are idiots. you make it sound like you realy know whats going on... but guess what you dont. you only know what your told!! end of story

Posted at 5:12PM on Oct 25th 2007 by 1 time

34. @33: Wow, thanks for that fact-filled insight. You really showed us the truth!

@Hiiro: I'm stunned at an actual unbiased, mature opinion. With the flood of trolls today I didn't think I'd see one. *golf clap*

Posted at 5:51PM on Oct 25th 2007 by Popfrogs

35. "Remember the Xbox360 has not yet made a profit."

And that just changed today.

$165M profit for the last quarter for the MS entertainment division.
$1.93B in revenue.

Posted at 7:24PM on Oct 25th 2007 by Pete

36. any of you dudes that know how Business works would understand.

Some businesses don't make a profit for up to 10 years! the smart investors can tell what will be good in the future, and as the saying goes - "you gotta spend money to make money"

anyway, all you arm chair economists and investors need to understand what you're talking about before you can comment on it.

Posted at 8:34PM on Oct 25th 2007 by stirlo

37. Looks like MS just made a profit for the second quarter in a row:

Posted at 8:51PM on Oct 25th 2007 by Ithilis

38. Its about the Games, the first year is always horrible for games. If you follow the sales they are matching the Xbox360 at the same time and that is with a price of $600.00. Why so bleak? I thought this was PS3 Fanboy. I'm tired of the negatives. Nintendo never has to answer any hard questions, Xbox 360 doesn't either. If you don't like the PS3 read a different Blog and let us get our news on PS3 here without Fanboy's from other consoled knocking it. All of the systems have something to offer so just vote with your pocket book. I'm getting a PS3 this Christmas and it is going to be great. BluRay movies and games that cannot be done on any other system.

Posted at 10:53PM on Oct 25th 2007 by bruterules

39. IMO this kind of news is upsetting and i would rather not know. Although I still believe Sony can make a comeback if they work harder. ^^

Posted at 11:12PM on Oct 25th 2007 by hpvs17

40. Pete, and Ithilis,

Those Halo 3 profits you talk about are the current sales revenue for the cost of producing and advertising everything required to maintain the 360's gaming division. But those inflated sales will drop off. Yet, the overhead cost will NOT.

How do I know this? IT's HAPPENED BEFORE WITH HALO 2!

January 28th, 2005

Remember, even if Halo 3 sells 8-9 MIL (which should happen). It's selling to their Halo/xbox fanbase. And even after 25 MIL xbox 1 sold. They still never sold 25 MIL xbox 1 Halo 2 copies.

This is called market saturation for a particular demographic. As the "pre-sales" Halo 3 drops off the revenue tally. You'll see a drop in weekly income.

Posted at 3:08AM on Oct 26th 2007 by GL

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